The great economic reshuffle

October 28, 2013

Branko Milanovic, the lead economist at the World Bank’s research department, has a new paper out on global income inequality (the paper was first spotted by John McDermott). Among other things, Milanovic compares the change in global income from 1988 to 2008:

He writes:

Global income distribution has thus changed in a remarkable way. It was probably the profoundest global reshuffle of people’s economic positions since the Industrial revolution. Broadly speaking, the bottom third, with the exception of the very poorest, became significantly better-off, and many of people there escaped absolute poverty. The middle third or more became much richer, seeing their real incomes rise by approximately 3% per capita annually.

And yet, those in the 75th to 90th percentile of the income distribution — including “many from former Communist countries and Latin America, as well as those citizens of rich countries whose incomes stagnated” — haven’t seen the sort of gains that the bottom half and the top 1% have.

Milanovic’s paper sheds light on the role location plays in global income distribution. He writes: “If most of global inequality is due to differences in location, can we treat location, and thus citizenship, as a rent? Is citizenship— belonging to a given country, most often through birth—something that gives us by itself the right to greater income?”

 

 

 

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